The American Interest
Analysis by Walter Russell Mead & Staff
ACA Death Spiral Watch

obamacare

Obamacare supporters have always feared that the young and the healthy won’t sign up for insurance in large enough numbers to make Obamacare work. Without enough enrollees in the that demographic, the system would experience an “adverse selection” death spiral in which only the sick and the old sign up, pushing premiums higher. In a worst case scenario, those higher premiums would in turn kick more people out of the pool, and so on, until the system collapses under its own weight.

The Journal reports that these early fears are starting to be realized: those who have so far bought insurance on the federal exchanges are on average older than insurers expected:

The numbers demonstrate a real-world fallout from the digital snafus: Less-healthy customers are more likely to persevere through technical obstacles to gain coverage, insurers say. Younger, healthier customers who feel less need for insurance—but whose widespread participation is important to the financial success of the system—could be quicker to give up.

The average enrollee age at Priority Health, a Michigan insurer, has ticked up to age 51 for newcomers, from about 41 years old for plans offered for the current year, said Joan Budden, chief marketing officer. Arise Health Plan, Wisconsin’s largest nonprofit insurer, said more than half its 150 signees are over 50, a higher proportion than expected, while declining to be specific on its target age.

As with most every story we’re reading about the Affordable Care Act right now, we don’t know if we’re looking at a lasting effect or a temporary blip. But so far the enrollee demographics seem to be a first step towards exactly what the opponents of the law predicted and its supporters feared: insurance pools are trending older. We’ll be watching closely to see if this initial trend becomes a spiral.

Published on November 5, 2013 12:15 pm
  • http://www.reticulator.com Reticulator

    I don’t for one minute believe that supporters “feared” the results we are getting. What we are seeing is just what they planned and expected (aside from the dysfunctional web site).

    Keep in mind that these are the same people who were willing to let people be deceived by the false statement, “If you like your plan, you can keep it.” We should not take anything they say at face value.

    • Corlyss

      For that to be even nearly the case, we would need to see their Plan B, which should appear shortly if “this is how they drew it up on the chalkboard.” If they don’t produce one, we’ll have the answer. I’m tending to think this is a busted play, not a sign of the genius we keep hearing about.

      • http://www.reticulator.com Reticulator

        They’ve been shouting their plan B from the rooftops.

        • Corlyss

          . . . which is . . . ?

          • http://www.reticulator.com Reticulator

            Single payer. Ein Volk, ein Reich, ein Payer.

          • Corlyss

            But how do they get for point A to point D? What’s the mechanisms?

          • http://www.reticulator.com Reticulator

            The mechanism is Congressional legislation. I don’t think they’d be so brazen as to enact it by fiat at this time.

          • Corlyss

            Then it ain’t goin’ nowhere. The house will never pass it.

          • rheddles

            Patience, my friend. Truman proposed it in 47 and they’re still working on it.

          • http://www.reticulator.com Reticulator

            You might be surprised. It isn’t as though Republicans are hard at work on alternatives.

          • Corlyss

            The Republicans don’t need to propose alternatives before the whole edifice comes crashing down. If I were one of their strategists, I’d remind ‘em “When your opponent is destroying himself, don’t get in the way.”

          • http://www.reticulator.com Reticulator

            Unfortunately, it never works that way. No bad program self-destructs. Not even Prohibition self-destructed, and in the case of Prohibition, getting rid of it didn’t require adoption of an alternative.

            Republicans are always looking for somebody else to do the heavy lifting for them. It’s no wonder they’ve been so ineffective.

      • Jacksonian_Libertarian

        Single payer is their end game, I don’t think they can get there with all the vested interests in the present system.

        • Corlyss

          Yes, I know that, but they have to have some mechanism to get from where they are now to that. IOW they have to have a shadow information system that they can suddenly produce and deploy that will function the way this c*ckup of a system was supposed to function. Frankly, I don’t think they can do it. Having it would mean they had a shadow contractor working with all the data and plans all along. I could be wrong, but I just don’t see THAT kind of duplicitous craft coming out of this crew. They’re certainly duplicitous enough to think of it but they lack the craft.

          • http://www.reticulator.com Reticulator

            Lack of craft doesn’t stop them. They think everybody else is stupid, and that they are smart. They can work out the details over a weekend.

            The success they had in wrecking things will go to their head and make them think they can use the same skills to build.

          • Corlyss

            But they can’t produce the mechanisms of Plan B out of thin air.

          • http://www.reticulator.com Reticulator

            You might be surprised. they’ve been thinking single-payer for many years now. This isn’t some Karl Rovian thing where you have to have a grand strategy. They have a goal, and they have an intermediate measure. It doesn’t need to be that complicated.

          • Corlyss

            Agreed conceptually it isn’t that complicated. That’s what they thought about the existing Obamacare system that’s crashing and burning. But practically, you have to have a design, a plan, pieces in place, etc. Where is that?

          • http://www.reticulator.com Reticulator

            They didn’t need to have any design in place In order to have expected this phase to do exactly what it’s doing.

          • Corlyss

            ?
            But they had a plan. It’s playing out in living color before our eyes.

        • http://www.reticulator.com Reticulator

          What vested interests? AFAIK, they’ve invested themselves entirely in Obama, and we know he’s capable of doing one thing and claiming he said another.

  • Kavanna

    Incompetence, or malice? Arrogantly incompetent, or incompetently arrogant?

    For now, the former is the clear explanation.

  • Corlyss

    Interesting that that Obamacare flack that was on with Chris Wallace Sunday used the same expression. The All Stars were surprised that a friend of the administration would be so blunt about what they were facing.

  • Jacksonian_Libertarian

    When the young realize they don’t even have to pay the fine, if they don’t get any tax refund from which it is taken. They will all be changing their W-4 to exclude a refund, and avoid paying for insanely expensive health insurance. In fact most people are just going to wait until they have a catastrophic illness before they get insurance, and maybe not even then. If you can’t be turned down, you don’t pay until you have to.

  • BrianFrankie

    Only a single anecdotal piece of evidence, but still… average age increasing from 41 to *51*. This is stunning. If it is repeated in more places, this is an unmitigated disaster, and the individual insurance market will quickly end. It will not be a spiral so much as a quick and sudden death plunge. (as an aside – is it worth taking short positions in health insurance companies in my portfolio? Could make some serious money here…)

    Combine this with the problems on the IT infrastructure. Now the admin is promising a working market by end of November, but anyone who has read any detail on the implementation of the exchanges is aware this is simply a lie. There is not a chance of a working system by end-Nov. More likely end-Mar 14. If then. The Washington Post has details that have left me entirely slack jawed with amazement:

    http://www.washingtonpost.com/politics/challenges-have-dogged-obamas-health-plan-since-2010/2013/11/02/453fba42-426b-11e3-a624-41d661b0bb78_story.html

    Much of this is literally unbelievable – just read the section on how and why the concepts of operation diagrams were canned. I honestly find I cannot believe this account that the WH interfered to eliminate necessary deliverables by the Project Team and think there must be some more to the story that would make this more comprehensible.

    But however we got here, the situation is quite desperate, and it is not too soon to start thinking about how it will be repaired. The hand writing is clear – the ACA is dead. By 1Q 14 it will be interred. So what comes next? There are a number of good ideas floating around, including ideas that have been pulled into fairly comprehensive plans. See some of the writings of Avik Roy and James Capretta. We need to get these ideas into the mainstream, preferably supported by a bipartisan group so that as the ACA collapses we’ll have workable backups. It will need to be a Congress-led effort, as the WH seems too committed to their errors to change course in time. Perhaps another Ryan-Wyden effort would start the ball rolling in the proper direction. I’d encourage people to speak up and let their Reps know that we expect them to work together to recover the situation.